Joint Circular No. 44/2000/TTLT/BTC-GD&DT-LDTB&XH dated May 23, 2000 of the Ministry of Finance, the Ministry of Education and Training and the Ministry of Labour, War Invalids and Social Affairs guiding the financial management of non-public units operating in the field of education and training

JOINT CIRCULAR

GUIDING THE FINANCIAL MANAGEMENT OF NON-PUBLIC UNITS OPERATING IN THE FIELD OF EDUCATION AND TRAINING

Pursuant to the Government’s Resolution No.90/CP of August 21, 1997 on the orientation and policy of socialization of educational, medical and cultural activities;
Pursuant to the Government’s Decree No.73/1999/ND-CP of August 19, 1999 on the policy of encouraging the socialization of activities in the fields of education, health care, culture and sports;
To unify the work of financial management of non-public education and training units; the Ministry of Finance, the Ministry of Education and Training and the Ministry of Labor, War Invalids and Social Affairs hereby jointly provide guidance on the financial management work as follows:

I. GENERAL PROVISIONS

1. Non-public education and training establishments which are set up and operate for the purpose of implementing the socialization policy include the semi-public, people-founded and private establishments in the national educational system.

2. The non-public education and training establishments operate for non-commercial purposes, effect the financial management according to the mechanism applicable to non-business administrative units with revenue and self-financing of their own activities. In the course of operation, if there appears any revenue-expenditure surplus, the establishments shall be entitled to make expenses for enhancing their material bases, raising their teaching and learning quality and setting up reward and welfare funds in order to raise the laborers’ material and spiritual life.

3. The non-public education and training establishments shall have to organize the financial and property management, as well as accountancy cost-accounting suitable to their own forms as prescribed by the State; submit to the inspection and control by the competent State agencies and may open accounts at the State treasuries or commercial banks for transactions.

4. The non-public education and training establishments shall enjoy the incentive policy applicable to establishments conducting the socialization under the Finance Ministry’s Circular No.18/2000/TT-BTC of March 1st, 2000 which guides a number of articles of the Government’s Decree No.73/1999/ND-CP of August 19, 1999 on the incentive financial regime for non-public establishments in the fields of education, health care, culture and sports.

II. SPECIFIC PROVISIONS

A. SUBJECTS OF APPLICATION

1. Subject to this Circular are non-public education and training establishments of all levels within the national educational system, including:

- Creche and baby-sitting groups;

- Kindergartens;

- "Young shoot" schools (creches-cum- kindergartens);

- Primary schools;

- Junior-high schools;

- Senior-high schools;

- General technical centers for vocational guidance; cultural fostering centers; foreign-language centers, informatics centers; regular education centers; complementary education schools;

- Vocational training establishments (vocational training schools, job-training centers, job-training classes);

- Vocational intermediate schools;

- Colleges;

- Universities;

2. Non-public education and training establishments operate in one of the following three forms:

a/ Semi-public education and training establishments:

- Semi-public education and training establishments are set up on the basis of close cooperation between the State-run education and training establishments and non-State organizations, enterprises and/or individuals of all economic sectors in the country by the mode of founding new establishments, transforming a part or whole of the material bases of a public establishment for the joint investment in the construction of material bases, management and administration of all operations of the new establishment according to the provisions of law.

b/ People-founded education and training establishments: are those set up by non-State organizations and/or collectives that jointly contribute capital for investment in the construction of material bases, jointly manage and administer all operations of the establishments according to the provisions of law.

c/ Private education and training establishments: are those set up, managed and administered by individuals and/or family households according to the provisions of law.

B. FINANCIAL SOURCES FOR OPERATION AND REVENUE-EXPENDITURE CONTENTS OF NON-PUBLIC EDUCATION AND TRAINING ESTABLISHMENTS

1. Operation financial sources:

- The State budget:

+ The value of the initial material bases and new investment in the course of operation of the semi-public establishments;

+ The amounts to be paid to but re-allocated by the State budget;

+ The funding for execution of State-level programs and subjects, and target programs (if any);

- The supplements from the annual financial results;

- The financial assistance, aid, supports and presents of domestic and foreign organizations and individuals;

- The capital contributed by organizations and individuals for investment in the construction, improvement, expansion and upgrading of material bases;

- The capital borrowed (if any) from banks and credit institutions;

2. Revenue-expenditure contents:

a/ The revenue contents:

- Tuition collected from pupils and students:

For centrally-run schools, the tuition shall be collected according to the bracket jointly guided by the Ministry of Finance, the Ministry of Education and Training and the Ministry of Labor, War Invalids and Social Affairs.

For locally-run schools, the tuition shall be collected under the guidance of the People’s Committees of the provinces and centrally-run cities at levels suitable to the local socio-economic situation.

- The revenue from service contracts on training, job-training, scientific research and technical application;

- The interests on deposits (if any) at banks and State treasuries;

- The revenue from production, joint-venture and cooperation;

- Other lawful revenues (if any).

b/ The expenditure contents:

- The expense for wages, remuneration, bonuses and contributions prescribed by law such as social insurance and medical insurance premiums, and trade union fees for laborers;

- The expenses for students and pupils: scholarships, commendation and rewards, and expense for implementation of the social policies towards students and pupils entitled thereto;

- The remuneration for teachers, researchers and guest lecturers;

- The expense for teaching, studying, training, job-training and scientific research activities as well as for the application of technologies in service of teaching and studying activities;

- The expense for training work to raise the skills of the establishments’ teachers and personnel;

- The duty-discharge expense, conference expense, working trip allowances and communication expense...

- The payment for renting material bases (if any), procurement, construction and repair of fixed assets, facilities and teaching aids;

- The fixed asset depreciation;

- The expense for performance of tax obligation (if any) towards the State;

- The expense for payment of interests on loan capital;

- Other expenses (if any);

C. FINANCIAL MANAGEMENT REGIME

1. For the semi-public education and training establishments:

a/ Management and use of capital and properties:

- The process of financial management of semi-public education and training establishments shall comply with the principle of clear identification and publicity of State budget investment sources and sources mobilized from outside the State budget.

- The State’s contributed capital includes capital in cash, supplies and goods, and fixed assets (houses, land, machinery and equipment, transport means and other properties...), which are provided as initial equipment by the State and handed over to the establishments in their operation course. Education and training establishments shall organize the inventory and evaluation of the entire State’s contributed capital and send reports thereon to their managing bodies for consideration and approval and further submission to the finance agencies of the same level for the fulfillment of the procedures to transfer the State’s properties and capital to the semi-public education establishments under the Finance Ministry’s Circular No.43/TC-QLCS of July 31, 1996.

Annually, the semi-public establishments shall organize the inventory and re-evaluation of their assets and send reports thereon to the finance agencies of the same level, clearly analyzing properties supplemented from the State’s contributed capital and left for the units.

For unnecessary or technically-obsolete properties, establishments may sell them to recover capital for supplement to their operation financial sources. Before selling them, the establishments shall have to set up evaluation councils and organize auctions according to the provisions of law.

- The State budget allocations for the realization of programs, subjects and projects shall be managed and used according to the approval by the competent authorities. Quarterly, the implementation tempo as well as the revenue-expenditure situation must be reported to the approving agencies.

- The capital contributed by organizations other than the State organizations and/or individuals of all economic sectors; as well as the loan capital shall be managed and used for the right purposes according to the ratified projects.

- The fixed asset depreciation shall be left for the units to enhance their material bases. When necessary, the heads of the semi-public establishments may set the quick depreciation rate in order to recover capital, which must, however, be suited to the solvency of the service beneficiaries.

b/ Semi-public education and training establishments may apply the regime of revenue-expenditure management applicable to the public establishments. Annually, the semi-public education and training establishments shall draft their revenue-expenditure estimates according to the creation sources, which, after being approved by the Managing Boards, shall be sent to their superior managing bodies for sum-up and submission to the finance agencies of the same level.

c/ Semi-public education and training establishments shall apply the accounting regime under the Finance Ministry’s Decision No.999/TC-QD-CDKT of November 2, 1996 promulgating the system of non-business administrative accounting regimes.

d/ Semi-public education and training establishments shall conduct the regular and irregular financial inspection and examination of the use of their fundings; publicize the revenues and expenditures, and the income distribution to laborers in the establishments; as well as the situation on asset increase or decrease according to the State’s capital sources and sources mobilized from outside the State budget.

e/ The heads of the establishments shall be the account holders, take responsibility before the Managing Boards and the direct managing bodies for the entire work of managing the finance and properties of the establishments.

f/ The annual financial results of semi-public establishments shall be determined on the basis of the difference between their total revenues and total expenditures in a fiscal year. If the revenues are bigger than the expenditures, the Managing Boards (for semi-public establishments) or the establishment heads (for people-founded establishments having semi-public sections) shall decide the expense levels for the following contents:

+ Supplement to the operation capital sources of the establishments, which must not be under 30% of the total revenue-expenditure surplus.

+ The remainder shall be added to the revenues to be spent on rewards and welfare for people in the establishments, subjects in direct cooperation with the establishments and income distribution according to the people’s capital contribution levels (if any). The revenue generated from the State’s contributed capital shall be kept at the establishments for investment in enhancing their material bases and accounted as the increase of the State’s contributed capital.

2. For the people-founded education and training establishments:

a/ The people-founded education and training establishments operate on the principle that their revenues cover all their expenses and their financial sources shall be preserved and developed.

b/ The people-founded education and training establishments, when assigned to execute the State’s programs, subjects or projects, shall be provided with funds by the State budget. Such funds shall be accounted separately and managed according to the regime prescribed by the State.

c/ With regard to unnecessary or technically-obsolete assets, the concerned education and training establishments may sell them to recover capital. The units shall set up evaluation councils and organize auctions according to the provisions of law. The proceeds from the sale of assets, after deducting the reasonable expenses therefor, shall be used to supplement the establishments’ operation capital sources.

d/ Annually, the Managing Boards shall approve the revenue-expenditure estimates and define structure of regular expenses and investment expenses; human and operation expenses; and determine the payment of interests to capital-contributing organizations and/or individuals according to their respective contributed capital proportions.

e/ The people-founded education-training establishments shall conduct the regular inspection and examination of the use of their fundings; and make public the financial revenues and expenditures as well as the situation on asset increase and decrease according to the capital creation sources to the officials and employees in the establishments.

f/ The annual financial results of the people-founded education and training establishments shall be determined on the basis of the difference between their total revenues and total expenditures in a fiscal year. The spending of the revenue-expenditure surplus shall be decided by the Managing Boards after consulting the financing agencies, for the following contents:

+ Enhancing the material bases, which must not be under 30% of the total revenue-expense surplus;

+ The remainder shall be used for rewards and welfare for people in the units, subjects in direct cooperation with the units and for income distribution according to the people’s capital contribution proportions;

g/ The people-founded education and training establishments shall effect the accountancy cost-accounting according to the accounting regime prescribed by the State, make quarterly and annual final account settlement reports on the whole financial situation of the establishments, and submit to the inspection and supervision by the finance agencies of the same level.

3. For the private education and training establishments:

Private education and training establishments shall be set up according to the stipulations of the State, operate on the principle of self-financing and take responsibility for financial management of their activities.

D. FINANCIAL HANDLING OF THE DISSOLVED AND BANKRUPT ESTABLISHMENTS

When non-public education and training establishments declare bankrupt or dissolved, the financial handling thereof shall be conducted according to the following order of priority:

- The expenses prescribed by law for dissolution or bankruptcy of the establishments;

- The wage-, severance allowance- and social insurance- debts prescribed by law and other interests under the already signed contracts;

- The tax debts (if any);

- The debts owed to listed organizations and individuals:

+ If the remaining value (properties and money) of the establishments is enough for payment of debts to creditors, each creditor shall have their debts fully paid.

+ If the remaining value (properties and money) of the establishments is not enough to pay debts to creditors, each creditor shall have their debts partially paid according to the corresponding rates.

- The remaining value (properties and money) (if any) of the establishments after the payment of all debts to creditors shall belong to:

+ The establishments’ owners, for private establishments

+ The members contributing capital to the establishments (including the State budget), for semi-public and people-founded establishments.

III. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect 15 days after its signing.

In the course of implementation, if any problem arises, it should be promptly reported to the above-mentioned ministries for consideration, appropriate amendment and supplement.